Majority of CEOs fear recession will be worse than the financial crisis

Deniza Cristian 13/01/2023 | 10:45

The vast majority of CEO respondents (98%) are bracing for an economic downturn characterized by geopolitical tensions, supply chain disruption, and ongoing COVID-19-related uncertainty, but appear split on its length, depth, and severity. These are some of the findings of the EY CEO Outlook Pulse – January 2023 that underline the uncertainty that looks set to define the business environment in 2023.


The survey, which recorded the views of 1,200 CEOs across the globe on their prospects, challenges, and opportunities, found that 48% foresee a moderate slowdown in the global economy, while more than half (55%) of those preparing for a persistent downturn fears a recession worse than the global financial crisis of 2007-08 in terms of its length and severity.

For the first time since 2020 (inaugural CEO Outlook survey) restrictive regulatory, trade, and investment policies (28%) have superseded COVID-19-related issues (19%) as the key reason for CEO respondents altering investment plans. As a result of these exacerbated geopolitical challenges, 97% of respondents are reviewing their plans with 44% delaying a planned investment and almost a third (32%) stopping planned investments altogether.

Almost a third (32%) of respondents consider uncertainty around the direction of monetary policy and an increase in the cost of capital to be the greatest risks to future growth for their business. While concerns over COVID-19-related uncertainty have receded, almost a third of CEOs (32%) still cite this as a key risk to their business (down from 43% in October 2022).

Peter Latos, Partner, Consulting, Strategy and Transactions Leader, EY Romania: “Notwithstanding growing economic headwinds fuelled by the geopolitical fallout from the ongoing war, Romania, despite its proximity to Ukraine, continues to buck the trend and is expected to deliver low single digit GDP growth in 2023. However, this does not mean that CEOs in Romania will be insulated from a global economic downturn. The fact that 89% of respondents are considering dealmaking of one form or another in the next 12 months resonates strongly with activity seen in the Romanian market, which recorded an increase in the number of deals in 2022 with no sign yet of this slowing. CEOs should reassess business fundamentals now, double down on core strengths and take bold decisions to address areas opportunities to drive organizational improvement.”

CEOs eye deals and investments in sustainability and people as routes to growth

Despite the negative outlook, CEOs are on the lookout for opportunities to gain a competitive advantage. Dealmaking of one kind or another remains a priority for respondents (89%) over the next 12 months with nearly half (46%) planning to move ahead with M&A, 58% with a joint venture or strategic alliances, and 34% with divestments.

To further shift the dial and emerge stronger and more competitive from the downturn, 39% of respondents are planning to increase investment in sustainability as a core aspect of their strategy and offering, including net-zero and other environmental and societal priorities. In addition, more than a third (36%) plan to increase their investment in talent, including workforce well-being and skills development. The majority of CEO respondents (70%) agree that flexible working will be critical to reducing employee churn and attracting new talent.

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Deniza Cristian | 19/12/2022 | 18:45

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